Forex Technical and Fundamental Analysis for October 17, 2011

EUR/USD Technical Analysis for October 17, 2011

The EUR/USDpair continues to run rampant and straight up during Friday’s session, proving that the market is certainly running on emotion at the moment. The hope that a solution will come out over the weekend G20 meeting seems to be part of the hope for this pair. However, this is highly unlikely and could set up the market for disappointment at this time. The 1.40 level is above, and it should be massive resistance. The 1.3850 level was broken to the upside, and this is very important as well. The truth is that this move has been too much too quick, and it could be a short-covering rally….or at least composed of a lot of covering. The light volumes in the stock markets suggest this could be the case. Also, we did stop at yet another massive resistance area at the close. With this in mind, it doesn’t look like it would take much over the weekend to spook the markets and get the bears back out in force. With this in mind, we are not willing to buy unless we are over the 1.40 level on a daily close. We are selling any signs of weakness at this point.

EUR/USD Daily Fundamental Analysis for October 17, 2011

The EUR/USD is set to start another week with the lack of major fundamentals as the focus remains on the euro area and how the leaders are moving to contain the debt crisis. Monday will see the market open to the remarks from the G20 finance chiefs hoping that they offer any insight on the path the leaders are considering containing the debt crisis in the euro area and place a strong firewall around Greece to prevent the contagion risk. Last week the euro ended with strongly weekly gains with the eased woes over the outlook for the euro area and optimism that the leaders are not on the right track and can contain the crisis, especially with the bank recapitalization agreed to be part of the plan. This week the focus will start to shift from optimism to volatility as the market eyes the October 23 summit and major data and earning will direct the attention to the sluggish global recovery. The United States will start the week at 12:30 GMT with the Empire Manufacturing index for October which is expected with improvement to -4.0 from -8.82. At 13:15 GMT the Industrial Production for September is due and expected to hold on the month with 0.2% gain and capacity utilization to move slightly higher to 77.5% from 77.4%.

AUD/USD Technical Analysis for October 17, 2011

The AUD/USD pair had a wildly bullish session on Friday as traders bought this pair hand over fist. The “risk on” trade was the order of the day, but one cannot help but think this move has been a bit on the parabolic side. With that in mind, we are approaching serious resistance all the way up to the 1.05 mark. We would also be looking at the possibility of headline risk out of the EU and other places, and be a bit concerned about owning the Aussie. Until we can close on the daily chart above the 1.05 mark, we think buying isn’t an option at this point. In fact, we like selling bearish candles under 1.05 if we can get them.

AUD/USD Daily Fundamental Analysis for October 17, 2011

The Australian dollar rallied against its U.S. counterpart as the Australian economy as the nation continued to report good data especially from the labour market and also benefited from eased woes over the debt crisis. Australia is one of a few countries that have many resources to counter sluggish global growth and the European debt crisis, whereas investors are waiting more details from Europe to see the next step from leaders to end the crisis and prevent a financial system meltdown with the risk now threatening banks. The week starts with the release of important data from both economies. As of 00:00 GMT the Australian consumer inflation expectations index is expected to rise to 3.0% in October 2.8% in September. The U.S. economy will release the Empire Manufacturing survey for October at 12:30 GMT where the index is expected to improve to -4.0 from -8.82. The Industrial Production for September will be released from the U.S. economy at 13:15 GMT and expected to maintain the same expansionary pace as the previous month of 0.2%. On the other hand, the Capacity Utilization is expected to rise to 77.5% from 77.4%.

EUR/CHF Technical Analysis for October 17, 2011

The EUR/CHFpair rose slightly on Friday as traders continue to buy the Euro. The hope is that there will be some kind of agreement or consensus over the weekend at the G20 summit, and this has had people buying the Euro in droves. However, this pair is remarkably quiet, and this could be a sign of underlying weakness in the Euro. The pair isn’t producing much in the way of tradable actions or signals, but is a study in Euro strength. To see the common currency rise so much in such a short time against the USD, but sit still against the CHF speaks volumes about the validity of buying the Euro for any length of time.

EUR/CHF Daily Fundamental Analysis for October 17, 2011

The EUR/CHF continues to fluctuate heavily yet within a rather tight range as seen last week, where the franc attempted to regain some strength as it stabilizes above the set floor by the SNB and investors see less likelihood for the SNB to move again. Although the euro was boosted last week with the unwinding on pessimism and hopes that the leaders will be able to contain the debt crisis, it still ended bearishly on the week versus the franc as investors reduced bets on a move from the SNB and the uncertainty over the euro outlook still remains high. With the lack of major fundamentals from the euro area andSwitzerlandtoday the market will react to the any news present from the weekend summit form the G20 finance chiefs that lay the grounds for the summit in early November. The focus remains the euro area and the market on Monday will react to any signal over how they are going to contain the crisis and more support will likely help the euro recover some of the losses versus the franc.

NZD/USD Technical Analysis for October 17, 2011

The NZD/USD pair finally managed to crack above the all-important 0.8000 level on Friday, as the traders around the world chose to carry risk into the weekend. The G20 meeting is hoped to produce some kind of solution for the EU, and as such – traders sold the Dollar off against almost anything they could. The Kiwi is highly sensitive to global risk, and will continue to be pushed around by the situation regarding Europe. In fact, at this point the technical analysis is one part charts, one part whatever news flow comes out. The meeting over the weekend is more likely to disappoint, so we aren’t quite comfortable buying this pair quite yet. After Monday, if we have another positive day, we could be buyers. If we open sharply lower on Monday, perhaps gapping – we would be ready to sell again. After all, the trend has been down until just a few short days ago.

NZD/USD Daily Fundamental Analysis for October 17, 2011

The NZD/USD pair advanced last week as greenback retreated against most of its major counterparts with the improved risk appetite. The EU leaders pledged to contain the debt crisis and prevent it from spreading to other countries. The market sentiment improved which encouraged investors to increase demand for the higher-yielding currencies pushing Kiwi to the upside against the greenback. On Monday, the New Zealand economy starts the data with the September performance services index at 21:30 GMT (Sunday) after it recorded 53.9 in August. The U.S. economy will release the Empire Manufacturing survey for October at 12:30 GMT where the index is expected to improve to -4.0 from -8.82. The Industrial Production for September will be released from the U.S. economy at 13:15 GMT and expected to maintain the same expansionary pace as the previous month of 0.2%. On the other hand, the Capacity Utilization is expected to rise to 77.5% from 77.4%.

USD/JPY Technical Analysis for October 17, 2011

The USD/JPYpair had another positive day on Friday, as traders decided to take on massive amounts of risk for the weekend. This was led by the belief that the G20 would produce some kind of solution to the EU debt crisis over the weekend. Added to that, the Bank of Japan is actively working against the appreciation of the Yen, and this pair was ready to rise. The consolidation area bordered by 76 and 77.50 as well is holding, and the market did in fact pull back later in the session. This leads us to believe the scalper’s market should continue in the near term.

USD/JPY Daily Fundamental Analysis for October 17, 2011

The USD/JPY pair traded in a range last week trying to reflect its downside trend, but the optimism in the financial market prevented the pair from record more gains. On the other hand, the Japanese yen retreated against most of its major counterparts, but it kept its gains against the dollar as the weak greenback opened the way for the yen to control the pair’s movement. On Monday at 04:30 GMT, the Japanese economy will start the week with the final August Industrial Production where it was reported with a rise of 0.8%, and by 0.6% on the year. The U.S. economy will release the Empire Manufacturing survey for October at 12:30 GMT where the index is expected to improve to -4.0 from -8.82. The Industrial Production for September will be released from the U.S. economy at 13:15 GMT and expected to maintain the same expansionary pace as the previous month of 0.2%. On the other hand, the Capacity Utilization is expected to rise to 77.5% from 77.4%.

GBP/USD Technical Analysis for October 17, 2011

The GBP/USDpair rose rapidly during the Friday session as traders took on more risk around the world. The 1.58 level was broken, but the later hours of the session saw this pair pullback. The real question now is whether or not the pair can continue. So far, it looks very bullish. With the G20 meeting over the weekend, traders will focus on anything Europe-related coming out, and as the British are so exposed to the EU debt issues, this will certainly have an effect on this pair. The pair looks strong technically, but is going to be prone to headline risks at this point in time. The issues in Europe are simply far too troublesome for it to be any other way. Because of this, we are still looking for rallies to sell, but this could be some time away. If we see a gap down at the week’s open – this pair falls hard.

GBP/USD Daily Fundamental Analysis for October 17, 2011

On Monday, while the British economy lacks fundamentals, the U.S. will release empire manufacturing for October at 12:30 GMT, followed by industrial production and capacity utilization for September at 13:15 GMT. The latest data from the U.S. has been showing improvement, especially the non-farm payrolls report for the month of September, yet the data is expected not have much impact on the pair’s movements which will probably follow the general sentiment in the market. Still, the main focus remains on the euro area to see the latest developments of the European debt woes to see the European leaders’ ability to shore up their economies and banks. In the coming period, if European leaders to launch strong measures that convince investors that they are able to contain the debt dilemma, the pair is predicted to continue its rise and the opposite is true. Also, the latest expansion in the Asset Purchase Facility by the BoE is predicted to cause the pound to appreciate further due to its oversupply in markets.

USD/CAD Technical Analysis for October 17, 2011

The USD/CADcontinued to fall during the Friday session, and now looks set to retest the parity level. The level is massive support, and far too close for comfort to sell at this level, so unless you are already short – it isn’t advised to be so at this point. The parity level should offer support, and could produce a long position if we get the correct supportive candle. If we can close below the parity level – this pair continues the long down slide that we have seen over the last several years. The pair is in a downtrend, so this wouldn’t be a massive surprise. However, with headline risks out there, it wouldn’t be a stretch to see this pair raise again either. This pair should continue to be very volatile in the near-term, so tight stops are recommended.

USD/CAD Daily Fundamental Analysis for October 17, 2011

The USD/CAD pair fell on Friday after the release of the retail sales index from the United States, which showed retail sales rose in September well above expectations, which overshadowed the worse than expected consumer confidence index. Accordingly, demand for higher yielding assets strengthened, which provided the Canadian dollar with strong bullish momentum that pushed the USD/CAD pair to the downside. Traders will continue to monitor the latest developments from Europe, where more optimism could push the USD/CAD pair lower. Moreover, traders will be eyeing the G20 meeting should they provide markets with any effective measures, although unlikely. Traders will be also watching manufacturing and industrial data from the United States on Monday. Monday October 17: The United States will start the week at 12:30 GMT with the Empire Manufacturing index for October which is expected with improvement to -4.0 from -8.82. At 13:15 GMT the Industrial Production for September is due and expected to hold on the month with 0.2% gain and capacity utilization to move slightly higher to 77.5% from 77.4%.

USD/CHF Technical Analysis for October 17, 2011

USD/CHF fell again on the Friday session, but continues to hang around the recent support level. In fact, it has been somewhat impressive as it simply doesn’t want to give way. Of course the market is being manipulated by the Swiss National Bank currently, as they do not want a stronger Franc than they already have. Because of this, you can only buy this pair, and with the Dollar being sold off against almost anything lately, it will be hard to buy. With this in mind, we are very flat and neutral this pair.

USD/CHF Daily Fundamental Analysis for October 17, 2011

On Monday, while the Swiss economy lacks fundamentals, the U.S. will release empire manufacturing for October at 12:30 GMT, followed by industrial production and capacity utilization for September at 13:15 GMT. The latest data from theU.S.has been showing improvement, especially the non-farm payrolls report for the month of September, yet the data is expected not have much impact on the pair’s movements which will probably follow the general sentiment in the market. Still, the main focus remains on the euro area to see the latest developments of the European debt woes to see the European leaders’ ability to shore up their economies and banks. In the coming period, if European leaders to launch strong measures that convince investors that they are able to contain the debt dilemma, the pair is predicted to retreat and the opposite is true.

 

Read more Weekly Fundamental Analysis here!

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.